Infrastructure conference in Westminster Tuesday 24th

A new organ­i­sa­tion called NEKS (for “New Eco­nom­ic Knowl­edge Ser­vices”, see www.neks.ltd) is hold­ing its inau­gur­al con­fer­ence on the eco­nom­ics of infra­struc­ture In West­min­ster on Tues­day Jan­u­ary 24th, and you should attend.

Why NEKS, and why Infra­struc­ture? The eco­nom­ic impor­tance of infra­struc­ture is obvi­ous, but the actu­al per­for­mance of infra­struc­ture often dif­fers rad­i­cal­ly from what is pre­dict­ed when it is being planned. Three forms of delu­sion make many infra­struc­ture projects far less ben­e­fi­cial than expect­ed by their pro­po­nents: the com­plex­i­ty of exe­cu­tion is under­es­ti­mat­ed, the ben­e­fits are over­es­ti­mat­ed, and ben­e­fits are also cal­cu­lat­ed poor­ly using dodgy eco­nom­ic the­o­ry.

These are pre­cise­ly the sort of issues that NEKS was formed to address. NEKS’s objec­tive with this con­fer­ence is to pro­vide a real under­stand­ing of how com­plex­i­ty and uncertainty—including the impact of actu­al human behav­iour and institutions—affect large pub­lic infra­struc­ture projects. These issues are sim­ply not ade­quate­ly con­sid­ered by the cur­rent “cost-ben­e­fit” method of eval­u­at­ing projects, which relies heav­i­ly on main­stream eco­nom­ic con­cepts of mar­gin­al cost and mar­gin­al util­i­ty.

For exam­ple, HM Treasury’s sup­ple­ment to The Green Book (the bible for eval­u­at­ing gov­ern­ment projects) talks about the need to con­sid­er ‘non-mar­gin­al eco­nom­ic impacts’ (which is almost the whole point of infra­struc­ture invest­ment), and to take into account ‘endoge­nous pref­er­ences’ (the fact that peo­ple change their micro behav­iour when the macro world changes around them). This sup­ple­ment fol­lowed the deba­cle over HS2, when the pur­port­ed strate­gic case based on trans­form­ing north­ern economies was total­ly divorced from the eval­u­a­tion of eco­nom­ic ben­e­fits, which were based main­ly on try­ing to quan­ti­fy the increased util­i­ty expe­ri­enced by lots of peo­ple sav­ing bits of time trav­el­ling.

Both Trump and May are por­tray­ing them­selves as “infra­struc­ture lead­ers”, but they will only prove to be so if their projects work and deliv­er on time. The chances that they will instead be White Ele­phants, deliv­ered too late with inad­e­quate or even neg­a­tive returns, are high unless the real-world com­plex­i­ties of devel­op­ing and deliv­er­ing infra­struc­ture are prop­er­ly con­sid­ered.

NEKS’s con­fer­ence at the pre­mi­um Coun­ty Hall venue in West­min­ster will take a real-world look at the UK’s infra­struc­ture plans. Vince Cable, the lead min­is­ter for indus­tri­al strat­e­gy in the Coali­tion Gov­ern­ment and an advo­cate for new eco­nom­ic think­ing, will kick off the con­fer­ence. A Min­is­ter should speak about infra­struc­ture and the Government’s fresh­ly mint­ed indus­tri­al strat­e­gy Green Paper. Ann Pet­ti­for, who suc­cess­ful­ly led the Jubilee 2000 cam­paign to for­give the debts of the world’s poor­est coun­tries, will speak about the financ­ing impli­ca­tions of infra­struc­ture. Brid­get Rosewell, a Nation­al Infra­struc­ture Com­mis­sion­er and def­i­nite­ly a new eco­nom­ic thinker, will be giv­ing a keynote. The ever con­tro­ver­sial hedge fund man­ag­er and Hayek fan, Crispin Odey, will add con­trar­i­an spice to pro­ceed­ings (he was one of the few peo­ple who saw the Crash com­ing….. and short­ed it).

There will be an inter­est­ing com­bi­na­tion of cre­ative, strate­gic and ana­lyt­i­cal thinkers attend­ing from many areas of life to dis­cuss these issues with.

If you’ll par­don the pun, I am keen that as many of you that fol­low this blog and under­stand the need for new eco­nom­ic think­ing, are there and I’ve per­suad­ed NEKS to offer a 50% dis­count on the cost of the con­fer­ence. Go here to get more infor­ma­tion. I will def­i­nite­ly be there from 2pm onwards (teach­ing respon­si­bil­i­ties pre­vent me attend­ing for the whole day). I hope to see you there.

About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.

Video overview

Debunking Economics II

Disclaimer

This site does not give personal financial advice. The focus of this blog is economic analysis, and how you interpret this with respect to your own financial decisions is entirely up to you.

Steve Keen, Debtwatch, and any employees or associates will not be held liable for any losses resulting from decisions taken by any individual or entity as a consequence of reading materials on this blog.

Membership or sponsorship of this blog does not constitute purchasing any product service apart from those listed in the membership and sponsorship conditions.